Wall St faces moment of truth over pay, perks

By Jonathan Spicer and Dan Wilchins - Analysis

NEW YORK (Reuters) - This may be the week that Wall Street finally realized a golden era of prestige, high pay and perks has ended.

Many bankers felt they could hunker down through the economic crisis without transforming their behavior.

But then this week new U.S. President Barack Obama made it clear their attitudes and compensation have to change at a time when they are being bailed out with many billions of dollars of taxpayers' money and the rest of the country is suffering from mass layoffs and declining retirement accounts.

"That is the height of irresponsibility. It is shameful," Obama said on Thursday, responding to news that Wall Street paid out $18.4 billion in bonuses for 2008.

In the previous few days, Obama and his spokesman had weighed in against Citigroup's decision to buy a $50 million corporate jet ordered in 2005, prompting the bank to cancel the contract, and attacked former Merrill Lynch CEO John Thain for spending $1.2 million on renovating his office.

One Democratic senator on Friday even proposed a law that would prevent bank executives from making more than $400,000 a year while they receive government financial support.

Add it all up, and Wall Street has little choice but to make changes big and small, veteran bankers and compensation experts said.

"You'd better scrutinize executive lunch rooms, you'd better scrutinize your offices, you'd better scrutinize those fresh flowers and car services and jets," said Alan Johnson, a leading compensation consultant.  Continued...